What did 2024 show us?

Last year, global stock markets experienced a mixed performance, defined by strong early growth and a volatile second half. Let’s take a quick look back at the year that was.
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Key takeaways
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Strong first half:

• Major indexes surged in the first half of the year, driven by optimism in tech and AI sectors;
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• Nasdaq posted a 20% gain, while the S&P 500 rose 15% by mid-year;
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• ‘Magnificent Seven’ (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla) highlighted this trend of surging tech stocks.

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A mixed end to the year:

• Volatility returned, fuelled by geopolitical tensions, fluctuating inflation expectations and weaker than expected growth;
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• We saw a market correction on August 5, 2024, largely driven by fears of a slowing U.S. and Chinese economies and a tech-sector pull back; 
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• A ‘Trump market rally’ saw stock markets surge with investors buoyed by expectations of business-friendly policies, including  tax cuts and deregulation. 
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What can we expect from investing in 2025? 

While we don’t have a crystal ball, the stock market can expect to navigate a mix of opportunities and challenges. Let’s dive in.

Chip does not provide financial or tax advice and this is not a personal recommendation to invest in any fund.

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Predictions and insights for the year:
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• Continued impact of AI: AI and automation may remain key drivers of growth, particularly in tech, healthcare, and industrials. We might only be just getting started in terms of where AI can take us and its benefits to even more sectors.
  
  
• Interest rate cuts: Central banks are likely to continue cutting rates, which is positive for your portfolio and should boost consumer spending. Reduced interest rates make it cheaper for companies to borrow money to expand.
  
  
• The UK holds potential: There is cautious optimism that the UK could see growth driven by undervalued markets and domestic strengths in finance, green energy and AI. The question remains, can our economy awake from its slumber?
  
  
• New horizons: Investors may turn their focus to regions like India, Latin America and the Pacific in search of stronger growth prospects in case of a US slowdown
  
  
•  An ESG comeback: ESG-focused sectors are likely to attract significant attention as governments and corporations intensify efforts to combat climate change. With opportunities in renewable energy, EVs, green infrastructure and sustainable agriculture. 

What should I do in 2025?

Here’s a few lessons to think about for 2025, but are generally considered to be good practice at any time of the year.  

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Timing the market is difficult: 

The stock market performed better than expected in 2024. Analysts underestimated the S&P 500's performance by around 15%, so even for the experts, predicting the highs and lows is notoriously hard to do.  

With this in mind, maintaining a strategy of regular deposits rather than attempting to find the ‘perfect’ time means you can buy into any growth and pick up cheaper unit prices during dips.

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Avoid a one track-mind: 

It’s easy to follow the latest high-growth industry, but try to think about your whole portfolio. The excitement surrounding artificial intelligence and the U.S. technology sector looks set to continue, but caution against tunnel-vision in just one thing. 

Keep your mind open to new investment opportunities and don’t put all your eggs in one basket. 

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Embrace diversity:

If the last 5 years has shown us anything, it's to expect the unexpected. To keep you on the right track, maintaining a balanced portfolio that includes a mix of assets can help smooth returns during turbulent periods. 

Diversification across asset classes, industries, and geographies remains the foundation of any sound investment strategy.
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We’ll be making it even easier to stay diversified in 2025 with 20+ new funds on the way, watch this space!)

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Stay committed to your investment plan: 

Market volatility can tempt investors to make impulsive decisions. However, sticking to a well-thought-out investment plan, aligned with your long-term goals and risk tolerance, is often more beneficial than making changes in response to short-term market fluctuations.
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Stay disciplined and remember, investing for the long-term will allow your portfolio the best chance to see the returns you want.

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Make it happen with Chip

Start your year right with a brand new positive habit. Whether that's investing in a new fund to diversify, setting up a regular monthly deposit, or making a plan for your finances, we’ve got the tools to help you reach your goals this year.
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Stay tuned for some exciting new updates and product announcements coming soon.
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Here’s to a year of growth for you all,


Stephen

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than your original investment. Chip does not provide financial or tax advice and this is not a personal recommendation to invest in any fund.
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‍Sources: Insight and analysis from: Bloomberg Markets, Financial Times (FT), CNBC Markets, Reuters Markets, Morningstar ESG Investing Reports, London Stock Exchange (LSE), TechCrunch, The Verge AI Hub, Yahoo Finance, Santander Asset Management, and MarketWatch.

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